Citibank to transfer branches to BB&T

Jose Castro – Fourth Estate Cooperative Contributor

Houston, TX, United States (4E) – In an announcement, BB&T Corp said it would purchase 41 branches of Citibank located in Texas, namely in Dallas, Houston, Midland and Odessa. These branches would add USD2.3 billion worth of deposits and about USD87 million worth of loans.

Previously, BB&T acquired 21 branches and about USD1.2 billion worth of deposits located in areas such as Austin, San Antonio and Bryan-College Station. When both deals are completed, the Texas banking giant would have 123 branches and about USD5.3 billion worth of deposits in Texas alone.

According to BB&T Chairman and CEO Kelly S. King, through a written statement, said, “We could not be more pleased to welcome our new Texas clients and associate into the BB&T family. Our previous 21 branch acquisition from Citibank has already proven to be a cultural fit, and we are excited to extend the BB&T brand to these individuals and our presence in these fast-growing strategically important markets.”

For its part, Citibank spokesperson Andrew Brent said through a statement, “Our branch footprint in Texas did not provide the scale to capture future growth and market share in traditional retail banking. We see the retail banking industry rapidly evolving beyond a purely branch-based model and so we will dedicate our resources and investments on a more focused branch footprint in our major urban markets and on expanding our digital channels nationally.”

Citibank, under the leadership of CEO Michael Corbat, had put the for sale sign for nearly 50 branches in the United States, with nearly USD 3 billion in deposits for California alone. In its latest filing, Citibank had 3,463 branches in 35 different countries throughout the world. One third of them, according to a June 30 filing, are located in North America.

The bank has been struggling as of late in the retail banking business, with income from these operations falling 46% in the second quarter of this year. Total revenues coming from business accounts are a third of Citibank’s overall total revenue.

Brent added that the said sale was not material to its overall earning and reassured the public that the bank would continue its services throughout the state of Texas.

Providing advice for the transaction is Deutsche Bank Securities Inc while BB&T engaged the services of Wachtell, Lipton, Rosen and Katz for legal advice.

Shares of BB&T Corp were pegged at USD37.53 last Wednesday, with a 52 week low of USD32.65. On the other hand, its 52 week high is USD41.04. Overall, the company has a market capitalization of USD27.006 billion and a P/E ratio of 15.55.

As a financial holding company, BB&T reported a USD0.70 earnings per share, which is lower than the target of USD0.74 for the same period. The company had reported revenues totaling USD2.30 billion for the quarter. On a year on year basis, the company’s revenue dropped by 7.9%.

It is predicted that by the end of the year, the BB&T earnings per share total would be at USD2.79. Surely, this would be attainable with the new acquisitions from Citibank in the greater Texas area.

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